401(k) Retirement Savings Plans

A 401(k) retirement savings plan allows you to save and invest money for retirement with tax benefits.

Contributions are made to an account in your name for the exclusive benefit of you and your beneficiaries. The value of the account is based on the contributions made and the investment performance over time.

Contributions

Pre-tax contributions you make reduce your taxable income for the year. These contributions and all associated earnings are then not subject to tax until you withdraw them. You also may be able to make after-tax Roth contributions which allow for potentially tax-free earnings.

Your employer may also contribute to your account, matching contribution that you make. Taking full advantage of matching employer contributions is an excellent way to build your retirement savings.

You can enroll online in your 401(k) plan. Depending on your plan rules, you may also be able to change your contribution amounts online. The following paper form is also available; contact your employer or your ICMA-RC representative to confirm you can use this:

401 Plan Contribution Form - to initiate contributions at time of enrollment, resume contributions if you previously enrolled, or to increase or decrease current contributions.

Investments

You control how your account is invested, choosing from options selected by your employer.

A typical plan includes a wide range of options, from more conservative stable value funds to more aggressive bond and stock funds. You may choose to build a diversified portfolio of various funds, select a simple yet diversified target-date or target-risk fund, or rely on specific investment advice through Guided Pathways.

Withdrawals

You can make withdrawals from your account when you leave employment. You have the ability to take payments as needed or request scheduled automatic payments. You maintain control over your investments and continue to benefit from tax deferral even after you leave your employer.

During employment, subject to your employer and IRS rules, you may also be able to make withdrawals after age 59½ or due to a hardship. A loan option may also be available.

Have a plan for taking withdrawals from your account — both to manage the tax bill and to provide for your future needs. For guidance, visit RealizeRetirement or contact your ICMA-RC representative.

Survivor Benefits

You designate a beneficiary, or beneficiaries, to receive any remaining assets upon your death. Designating beneficiaries can help ensure your assets are paid per your wishes, avoid the potential costs and delays of probate, and allow non-spouse beneficiaries to receive additional tax benefits.

Note: if you are married, most plans require your spouse be your beneficiary for 100 percent of your account unless your spouse waives this right.